American Woodmark Corporation Announces Second Quarter Results and a $125 Million Stock Repurchase Authorization
American Woodmark Corporation (NASDAQ: AMWD) reported a 15.6% decrease in net sales to $473.9 million for the second fiscal quarter of 2024. However, net income increased by 5.4% to $30.3 million. The company also announced a new $125 million authorization for future share repurchases.
Positive
Net income increased by 5.4% year-over-year
Adjusted EBITDA increased 7.0% year-over-year to $72.3 million
Repurchased 722,515 shares for $52.1 million during the first six months of fiscal 2024
Negative
Net sales decreased by 15.6% year-over-year
Low double digit net sales decline year-over-year expected for fiscal 2024
11/30/2023 - 04:05 PM
Fiscal Second Quarter 2024 Financial Highlights:
Net sales decreased 15.6% year-over-year to $473.9 million
Net income increased 5.4% year-over-year to $30.3 million
GAAP EPS of $1.85 ; Adjusted EPS of $2.36
Adjusted EBITDA increased 7.0% year-over-year to $72.3 million
Cash provided by operating activities of $57.0 million ; free cash flow of $37.4 million
Repurchased 394,220 shares for $30.0 million
Board approved a new $125 million authorization for future share repurchases
Fiscal 2024 Financial Highlights:
Net sales decreased 12.0% year-over-year to $972.1 million
Net income increased 39.6% year-over-year to $68.2 million
GAAP EPS of $4.13 ; Adjusted EPS of $5.15
Adjusted EBITDA increased 18.8% year-over-year to $147.5 million
Cash provided by operating activities of $143.7 million ; free cash flow of $109.9 million
Repurchased 722,515 shares for $52.1 million
WINCHESTER, Va. --(BUSINESS WIRE)--
American Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced results for its second fiscal quarter ended October 31, 2023.
“Our teams delivered strong financial performance in the second quarter of fiscal year 2024 despite the slowing demand environment,” said Scott Culbreth, President and CEO. “Consistent with the first quarter of fiscal year 2024 performance, net sales and Adjusted EBITDA exceeded our expectations as improved operational performance continues. The Company’s net sales outlook for the remainder of the fiscal year remains unchanged from the prior outlook but we now expect stronger Adjusted EBITDA performance for the remainder of the fiscal year consistent with the improvements needed to meet our long-term goals.”
Second Quarter Results
Net sales for the second quarter of fiscal 2024 decreased $87.6 million , or 15.6% , to $473.9 million compared with the same quarter of the prior fiscal year. Net income was $30.3 million ($1.85 per diluted share) compared with $28.8 million ($1.73 per diluted share) in the same quarter of the prior fiscal year. Net income for the second quarter of fiscal 2024 increased $1.6 million due to operational improvements in our manufacturing facilities, a stabilizing supply chain and reduced overhead spending, partially offset by a decrease in net sales. Adjusted EPS per diluted share was $2.36 for the second quarter of fiscal 2024 compared with $2.24 in the same quarter of the prior fiscal year. Adjusted EBITDA for the second quarter of fiscal 2024 increased $4.7 million , or 7.0% , to $72.3 million , or 15.3% of net sales, compared to $67.6 million , or 12.0% of net sales, for the same quarter of the prior fiscal year.
Fiscal Year to Date Results
Net sales for the first six months of fiscal 2024 decreased $132.3 million , or 12.0% , to $972.1 million compared with the same period of the prior fiscal year. Net income was $68.2 million ($4.13 per diluted share) compared with $48.9 million ($2.94 per diluted share) in the same period of the prior fiscal year. Net income for the first six months of fiscal 2024 increased $19.3 million due to operational improvements in our manufacturing facilities, a stabilizing supply chain and reduced overhead spending, partially offset by a decrease in net sales and a $4.9 million pre-tax charge related to Antidumping and Countervailing Duty Orders on Vietnamese plywood imports recognized in the first quarter of fiscal 2024, which we have previously disclosed. Adjusted EPS per diluted share was $5.15 for the first six months of fiscal 2024 compared with $3.94 in the same period of the prior fiscal year. Adjusted EBITDA for the first six months of fiscal 2024 increased $23.4 million , or 18.8% , to $147.5 million , or 15.2% of net sales, compared to $124.1 million , or 11.2% of net sales, for the same period of the prior fiscal year.
Balance Sheet & Cash Flow
As of October 31, 2023, the Company had $96.4 million in cash plus access to $323.2 million of additional availability under its revolving credit facility. Also, as of October 31, 2023, the Company had $206.3 million in term loan debt and $163.8 million drawn on its revolving credit facility.
Cash provided by operating activities for the first six months of fiscal 2024 was $143.7 million and free cash flow totaled $109.9 million . The Company repurchased 394,220 shares, or approximately 2.5% of shares outstanding, for $30.0 million during the second quarter of fiscal 2024, and 722,515 shares, or approximately 4.5% of shares outstanding, for $52.1 million during the first six months of fiscal 2024.
On November 29, 2023, the Board of Directors authorized a stock repurchase program of up to $125 million of the Company's outstanding common shares. In conjunction with this authorization the Board of Directors cancelled the remaining $22.9 million that had yet to be repurchased under the $100 million existing authorization from May 25, 2021. Any repurchases under the stock repurchase program are subject to market conditions, the Company’s cash requirements for other purposes, compliance with applicable laws and regulations and contractual covenants and any other factors management may deem relevant at the time of such repurchases. The Company is not obligated to make any stock repurchases in the future.
Fiscal 2024 Financial Outlook
For fiscal 2024 (which includes the now completed second quarter) the Company expects:
Low double digit net sales decline year-over-year
Adjusted EBITDA in the range of $235 million to $250 million
“During the recently completed second quarter, our teams improved Adjusted EBITDA by 330 BPS to $72.3 million , or 15.3% of net sales, exceeding our expectations. Our team continues to deliver on the commitment to improving our results,” said Paul Joachimczyk, Senior Vice President and Chief Financial Officer. “Given our strong performance for the first half of the fiscal year, we are increasing our full fiscal year 2024 Adjusted EBITDA outlook to $235 million to $250 million .”
Our Adjusted EBITDA outlook excludes the impact of certain income and expense items that management believes are not part of underlying operations. These items may include restructuring costs, interest expense, stock-based compensation expense and certain tax items. Our management cannot estimate on a forward-looking basis the impact of these income and expense items on its reported net income, which could be significant, are difficult to predict, and may be highly variable. As a result, the Company does not provide a reconciliation to the closest corresponding GAAP financial measure for its Adjusted EBITDA outlook.
About American Woodmark
American Woodmark celebrates the creativity in all of us. With over 8,800 employees and more than a dozen brands, we’re one of the nation’s largest cabinet manufacturers. From inspiration to installation, we help people find their unique style and turn their home into a space for self-expression. By partnering with major home centers, builders, and independent dealers and distributors, we spark the imagination of homeowners and designers and bring their vision to life. Across our service and distribution centers, our corporate office, and manufacturing facilities, you’ll always find the same commitment to customer satisfaction, integrity, teamwork, and excellence. Visit americanwoodmark.com to learn more and start building something distinctly your own.
Use of Non-GAAP Financial Measures
We have presented certain financial measures in this press release which have not been prepared in accordance with U.S. generally accepted accounting principles (GAAP). Definitions of our non-GAAP financial measures and a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP are provided below following the financial highlights under the heading "Non-GAAP Financial Measures."
Safe harbor statement under the Private Securities Litigation Reform Act of 1995: All forward-looking statements made by the Company involve material risks and uncertainties and are subject to change based on factors that may be beyond the Company's control. Accordingly, the Company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the Company's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
AMERICAN WOODMARK CORPORATION
Unaudited Financial Highlights
(in thousands, except share data)
Operating Results
Three Months Ended
Six Months Ended
October 31,
October 31,
2023
2022
2023
2022
Net sales
$
473,867
$
561,499
$
972,122
$
1,104,392
Cost of sales & distribution
370,708
462,765
759,354
918,911
Gross profit
103,159
98,734
212,768
185,481
Sales & marketing expense
22,685
24,651
47,045
50,417
General & administrative expense
35,036
32,101
70,630
62,281
Restructuring charges, net
(26
)
—
(198
)
—
Operating income
45,464
41,982
95,291
72,783
Interest expense, net
1,953
4,422
4,390
8,475
Pension settlement, net
—
(6
)
—
(245
)
Other (income) expense, net
3,050
(897
)
1,975
(671
)
Income tax expense
10,120
9,679
20,735
16,370
Net income
$
30,341
$
28,784
$
68,191
$
48,854
Earnings Per Share:
Weighted average shares outstanding - diluted
16,420,760
16,657,454
16,505,266
16,638,741
Net income per diluted share
$
1.85
$
1.73
$
4.13
$
2.94
Condensed Consolidated Balance Sheet
(Unaudited)
October 31,
April 30,
2023
2023
Cash & cash equivalents
$
96,381
$
41,732
Customer receivables
120,742
119,163
Inventories
162,062
190,699
Other current assets
22,880
16,661
Total current assets
402,065
368,255
Property, plant and equipment, net
235,172
219,415
Operating lease assets, net
94,601
99,526
Customer relationship intangibles, net
7,611
30,444
Goodwill
767,612
767,612
Other assets
27,044
33,546
Total assets
$
1,534,105
$
1,518,798
Current portion - long-term debt
$
2,269
$
2,263
Short-term operating lease liabilities
25,775
24,778
Accounts payable & accrued expenses
153,445
151,083
Total current liabilities
181,489
178,124
Long-term debt
370,930
369,396
Deferred income taxes
7,275
11,930
Long-term operating lease liabilities
74,995
81,370
Other liabilities
3,836
4,190
Total liabilities
638,525
645,010
Stockholders' equity
895,580
873,788
Total liabilities & stockholders' equity
$
1,534,105
$
1,518,798
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
October 31,
2023
2022
Net cash provided by operating activities
$
143,722
$
55,426
Net cash used by investing activities
(33,837
)
(10,966
)
Net cash used by financing activities
(55,236
)
(21,951
)
Net increase in cash and cash equivalents
54,649
22,509
Cash and cash equivalents, beginning of period
41,732
22,325
Cash and cash equivalents, end of period
$
96,381
$
44,834
Non-GAAP Financial Measures
We have reported our financial results in accordance with U.S. generally accepted accounting principles (GAAP). In addition, we have discussed our financial results using the non-GAAP measures described below.
Management believes all of these non-GAAP financial measures provide an additional means of analyzing the current period's results against the corresponding prior period's results. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company's reported results prepared in accordance with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
We use EBITDA, Adjusted EBITDA and Adjusted EBITDA margin in evaluating the performance of our business, and we use each in the preparation of our annual operating budgets and as indicators of business performance and profitability. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA margin allow us to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance.
We define EBITDA as net income (loss) adjusted to exclude (1) income tax expense (benefit), (2) interest expense, net, (3) depreciation and amortization expense, (4) amortization of customer relationship intangibles and trademarks. We define Adjusted EBITDA as EBITDA adjusted to exclude (1) expenses related to the acquisition of RSI Home Products, Inc. ("RSI acquisition") and the subsequent restructuring charges that the Company incurred related to the acquisition, (2) non-recurring restructuring charges, (3) net gain/loss on debt forgiveness and modification, (4) stock-based compensation expense, (5) gain/loss on asset disposals, (6) change in fair value of foreign exchange forward contracts, and (7) pension settlement charges. We believe Adjusted EBITDA, when presented in conjunction with comparable GAAP measures, is useful for investors because management uses Adjusted EBITDA in evaluating the performance of our business.
We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of net sales.
Adjusted EPS per diluted share
We use Adjusted EPS per diluted share in evaluating the performance of our business and profitability. Management believes that this measure provides useful information to investors by offering additional ways of viewing the Company's results by providing an indication of performance and profitability excluding the impact of unusual and/or non-cash items. We define Adjusted EPS per diluted share as diluted earnings per share excluding the per share impact of (1) expenses related to the RSI acquisition and the subsequent restructuring charges that the Company incurred related to the RSI acquisition, (2) non-recurring restructuring charges, (3) the amortization of customer relationship intangibles and trademarks, (4) net gain/loss on debt forgiveness and modification, (5) pension settlement charges, and (6) the tax benefit of RSI acquisition expenses and subsequent restructuring charges, the net gain on debt forgiveness and modification and the amortization of customer relationship intangibles and trademarks. The amortization of intangible assets is driven by the RSI acquisition and will recur in future periods. Management has determined that excluding amortization of intangible assets from our definition of Adjusted EPS per diluted share will better help it evaluate the performance of our business and profitability and we have also received similar feedback from some of our investors.
Free cash flow
To better understand trends in our business, we believe that it is helpful to subtract amounts for capital expenditures consisting of cash payments for property, plant and equipment and cash payments for investments in displays from cash flows from continuing operations which is how we define free cash flow. Management believes this measure gives investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment. It also provides a measure of our ability to repay our debt obligations.
Net leverage
Net leverage is a performance measure that we believe provides investors a more complete understanding of our leverage position and borrowing capacity after factoring in cash and cash equivalents that eventually could be used to repay outstanding debt.
We define net leverage as net debt (total debt less cash and cash equivalents) divided by the trailing 12 months Adjusted EBITDA.
A reconciliation of these non-GAAP financial measures and the most directly comparable measures calculated and presented in accordance with GAAP are set forth on the following tables:
Reconciliation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin
Three Months Ended
Six Months Ended
October 31,
October 31,
(in thousands)
2023
2022
2023
2022
Net income (GAAP)
$
30,341
$
28,784
$
68,191
$
48,854
Add back:
Income tax expense
10,120
9,679
20,735
16,370
Interest expense, net
1,953
4,422
4,390
8,475
Depreciation and amortization expense
11,647
12,334
23,392
24,764
Amortization of customer relationship intangibles
11,417
11,417
22,834
22,834
EBITDA (Non-GAAP)
$
65,478
$
66,636
$
139,542
$
121,297
Add back:
Acquisition and restructuring related expenses (1)
20
20
40
40
Non-recurring restructuring charges, net (2)
(26
)
—
(198
)
—
Pension settlement, net
—
(6
)
—
(245
)
Change in fair value of foreign exchange forward contracts (3)
3,116
(818
)
2,101
(580
)
Stock-based compensation expense
2,155
1,754
4,402
3,389
Loss on asset disposal
1,586
37
1,593
214
Adjusted EBITDA (Non-GAAP)
$
72,329
$
67,623
$
147,480
$
124,115
Net Sales
$
473,867
$
561,499
$
972,122
$
1,104,392
Net income margin (GAAP)
6.4
%
5.1
%
7.0
%
4.4
%
Adjusted EBITDA margin (Non-GAAP)
15.3
%
12.0
%
15.2
%
11.2
%
(1) Acquisition and restructuring related expenses are comprised of expenses related to the RSI acquisition and the subsequent restructuring charges that the Company incurred related to the acquisition.
(2) Non-recurring restructuring charges are comprised of expenses incurred related to the nationwide reduction-in-force implemented in the third and fourth quarters of fiscal 2023.
(3) In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange rates. The Company manages these risks through the use of foreign exchange forward contracts. The changes in the fair value of the forward contracts are recorded in other (income) expense, net in the operating results.
Reconciliation of Net Income to Adjusted Net Income
Three Months Ended
Six Months Ended
October 31,
October 31,
(in thousands, except share data)
2023
2022
2023
2022
Net income (GAAP)
$
30,341
$
28,784
$
68,191
$
48,854
Add back:
Acquisition and restructuring related expenses
20
20
40
40
Non-recurring restructuring charges, net
(26
)
—
(198
)
—
Pension settlement, net
—
(6
)
—
(245
)
Amortization of customer relationship intangibles and trademarks
11,417
11,417
22,834
22,834
Tax benefit of add backs
(2,956
)
(2,961
)
(5,896
)
(5,861
)
Adjusted net income (Non-GAAP)
$
38,796
$
37,254
$
84,971
$
65,622
Weighted average diluted shares (GAAP)
16,420,760
16,657,454
16,505,266
16,638,741
EPS per diluted share (GAAP)
$
1.85
$
1.73
$
4.13
$
2.94
Adjusted EPS per diluted share (Non-GAAP)
$
2.36
$
2.24
$
5.15
$
3.94
Free Cash Flow
Six Months Ended
October 31,
2023
2022
Net cash provided by operating activities
$
143,722
$
55,426
Less: Capital expenditures (1)
33,842
10,987
Free cash flow
$
109,880
$
44,439
(1) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in displays.
Net Leverage
Twelve Months Ended
October 31,
(in thousands)
2023
Net income (GAAP)
$
113,061
Add back:
Income tax expense
33,327
Interest expense, net
11,909
Depreciation and amortization expense
46,706
Amortization of customer relationship intangibles
45,667
EBITDA (Non-GAAP)
$
250,670
Add back:
Acquisition and restructuring related expenses (1)
1,327
Non-recurring restructuring charges, net (2)
80
Pension settlement
238
Net gain on debt modification
(2,089
)
Change in fair value of foreign exchange forward contracts (3)
2,681
Stock-based compensation expense
8,409
Loss on asset disposal
2,429
Adjusted EBITDA (Non-GAAP)
$
263,745
As of
October 31,
2023
Current maturities of long-term debt
$
2,269
Long-term debt, less current maturities
370,930
Total debt
373,199
Less: cash and cash equivalents
(96,381
)
Net debt
$
276,818
Net leverage (4)
1.05
(1) Acquisition and restructuring related expenses are comprised of expenses related to the RSI acquisition and the subsequent restructuring charges that the Company incurred related to the acquisition.
(2) Non-recurring restructuring charges are comprised of expenses incurred related to the nationwide reduction-in-force implemented in the third and fourth quarters of fiscal 2023.
(3) In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange rates. The Company manages these risks through the use of foreign exchange forward contracts. The changes in the fair value of the forward contracts are recorded in other (income) expense, net in the operating results.
(4) Net debt divided by Adjusted EBITDA for the twelve months ended October 31, 2023.
View source version on businesswire.com: https://www.businesswire.com/news/home/20231130989205/en/
Kevin Dunnigan
VP & Treasurer
540-665-9100
Source: American Woodmark Corporation
What are the financial highlights for the second fiscal quarter of 2024 for American Woodmark Corporation (NASDAQ: AMWD)?
The net sales decreased by 15.6% to $473.9 million, while net income increased by 5.4% to $30.3 million. The company also reported an increase in Adjusted EBITDA by 7.0% to $72.3 million.
What is the outlook for fiscal 2024 for American Woodmark Corporation (NASDAQ: AMWD)?
The company expects a low double digit net sales decline year-over-year and an Adjusted EBITDA in the range of $235 million to $250 million for fiscal 2024.
Did American Woodmark Corporation (NASDAQ: AMWD) repurchase any shares?
Yes, the company repurchased 722,515 shares for $52.1 million during the first six months of fiscal 2024.